This dissertation examines the way in which the Kazakhstani state redefined its role in managing oil and gas resources between 1992 and 1998. The governments of hydrocarbon-rich post-Soviet republics such as Russia, Kazakhstan, Azerbaijan, and Turkmenistan faced the common challenge of restructuring their petroleum industries to boost the export of oil and gas. This study argues that by 1998 three patterns have emerged, ranging from a more radical state retrenchment in Russia, to reinforced state monopoly in Azerbaijan and Turkmenistan, to a “mixed” pattern of state participation in Kazakhstan, consisting of both large-scale privatization of oil assets and the formation of a fully state-owned national oil company, Kazakhoil. This dissertation analyzes the process of restructuring Kazakhstan's oil sector through comparison with the Russian petroleum industry. In Russia, several private, vertically integrated oil companies (VICs) were formed on the basis of existing oil-producing units and soon emerged as essential players in the Russian oil sector. By contrast, Kazakhstan's marginalized status within the Soviet system of oil production resulted in the absence of organizationally strong sectoral interests capable of claiming control over the industry after the independence. Privatization of Kazakhstan's oil enterprises, conducted by the government in spite of the resistance from local oil managers, transferred controlling stakes to foreign investors and further weakened domestic oil interests. Unencumbered state autonomy allowed the increasingly authoritarian Kazakhstani government to adopt relatively modern and investor-friendly petroleum legislation by decree. In Russia, the government's efforts to reform oil-related legislation were blocked by the leftist-dominated Duma, the democratically elected lower chamber of the Russian parliament. On the basis of these findings, this dissertation concludes that the dynamics of state withdrawal from the oil sector in post-Soviet context are determined primarily by structural organization of domestic oil industry inherited from the Soviet era, resulting balance of power between the state and private sectoral actors, and general mode of state-society relations in each country.